National Republican., 1887-05-06
THE PACIFIC RAILROADS.
ATTORNEY HOLMES GIVES SOME MORE
INTERESTING INFORMATION.
The Consolidation of tho Kansas Pa
cific, Denver Pacific, and Union
Pacific Roads, and the Transfer of
valueless Stock by Gould and Others
for Union Pacific Stock.

NEW YORK, May 5.-The examination OF
Special Counsel Artemus II. Holmes, Of the
Union Pacific railroad, was continued be-
fore Commissioners Pattison, Anderson,
and Littler to-day. Mr.. Anderson held In
his hand the Judgment roll In the matter OF
the hearing before Referee Ruggles, on the
application to have the Denver Pacific stock
released as q security for the mortgages on
the Kansas Pacific, Of which witness related
the story yesterday. Mr.. Anderson was in
formed Of the name Of the court stem
ographer who took the minutes. Mr.. An
derson asked II the witness knew who
erased the answer to this question, "What
were the net earnings Of the Kansas Pacific
last year ?" The original answer was, "Not
much, II anything" and over the erasure
was written, "About half million dollars"
Mr.. Holmes knew nothing about this, but
thought the substituted answer probably
the correct one. The written.in matter was
In hand different from that OF the body OF
the report.
Mr.. Holmes thought Judge Dillon drew
up the articles OF consolidation OF the
Kansas. Pacific and Union Pacific, and that II
was prior to Jan. 2i, 1880, or prior to the
time the 29,9S0 Of Denver Pacific stock
pH6Seu 1rOU INC OWnprbulD Vi
Pacific to the hands Of the !'Unton Pacific
party,n Messrs. Jay Gould, Russell Sage,
and others.
The drctors OF the Kansas Pacific and
Union Pacific In January, 1880, had each
among their members, Gould, Sage, Ames,
Dillon, Atkins, Baker, and Dexter, and
Holmes thought both boards had ameeting
on the same day OF the decree releasing the
Denver Pacific stock.
The rates of exchange OF the various Sc
curities were arranged by symposium OF
all the interests and the discussions took
place "everywhere from Denver to New
York" Louis II, Meyer, August Rutter,
Horace White, the st. Louis party, and the
Union Pacific party were among those who
took part In the discussions, and all of the
securities were represented and agreed upon
the values In exchange as named In the
consolidated mortgage executed Jan. III,
1880.
Mr.. Holmes could not say how much Of
the various stocks were Interested IN this
pool. The value increased later, but wit
| ness could not say what was the proper
| tionate increase. 1t was the original plan
| to issue new stock, and these values were
| intended to be followed In exchanging old
| for new stock. Some OF the stock was
| afterwards withdrawn, and Mr.. Holmes
was OF opinion that among the withdrawn
| stock was that OF the Kansas Pacific, OF
which Jay Gould was the largest holder
| seven.tenths Of oil controlled, aud dictated
the values. The record states that Mr..
| Gould held and voted on 79,4l4 shares, Mr..
| Ames 4,035, Sidney Dillon 6,1lS, Henry
| Willard not any, nor Mr.. Holmes. Russell
Sage held 9,977 shares, and these consti-
tuted the Union Pacific party. The shares
were $3.50 each, and 199,0S4 shares were
were all directors Of the Union Pacific.
Mr.. Holmes originally kept the pool ac-
counts, but didn't know now much profit
there was In the pool, but thought not so
much as $2O,O00,000.
Commissioner Pattison asked who got
possession of the $l0,000,000 Of Kansas
Pacific and the 1900, 900 Of Denver Pacific
stock; but Mr.. Holmes said he thought
they simply drifted back to their original
owners. OF the Denver Pacific stock the Kan
sas Pacific owned about So, ,000, 900 worth,
but It had no Independent value, and was
only valuable as 1t aided In controlling the
connections between Denver and Cheyenne.
The schedule at which the various securl-
ties were admitted to the pool was as fol-
lows: Stock, 12l per cent; floating debt,
so per cent; unsubordinated income bonds,
80 per cent; subordinated income bonds,
80 per cent, and second land.grant bonds
at so per cent.
"Is'it not time" asked Mr.. Anderson,
"that Jay Gould, Sidney Dillon, Russell
Sage, Frederick Ames, and Others you have
named, whose names ! have forgotten, OBJ.
tained credit by means OF the pool of large
amounts of Kansas Pacific stock in subor.
dinated bonds, ,unsubordiuate bonds, second
land grant bonds, Leayenworth Pacific
stock, &C."
Mr.. Holmes said "Yes, in exchange TO,
other securities" Mr.. Holmes made the
statement that the Union Pacific proated
!, by the consolidation, in that 1t got the
benefit of all the handling and there
by stopped competition of the Kan
sas Pacific stops, and Mr.. Gould thus
controlled dangerous weapon OF 0
hostile rival. Then Mr.. Anderson put
another question, and Mr.. Holmes said Il
was true that when Mr.. Gould, Mr.. Sage
for the consolidation they owned large
share of the stock Of the Kansas Pacific
and Denver Pacific, and that the Union
Pacific stock which they received In ex
change for their old stock was of far
greater value than that of the old stock
They got much more than II there hat
been no consolidation. If the consolida
would not have been worth 10 cents on thu
dollar, and the Denver Pacific stock woult
not have been worth more than It's value q
waste paper. To Gen. Pattison, Mr.
Holmes said he did not think the effec
was to load the Union Pacific with tw'
| valueleSs roads, because the Kansas Pacln
had been good paying road ever since
This was because under the consolidation
the territory Of the two roads is opened
Mr.. Holmes thought Mr.. Dillon's testimon,
before Referee Ruggles, Jan. 20, 18S0-tha
the Denver Pacific stock was not WORT
anything to the Kansas Pacific, but coult
, be made worth SO, 100000 II freed from tn
mortgage and used for certain things-wa
perfectly consonant, and that "certail
thingsn meant the freeing OF the road, I,
use In connection with the Kansas Pa
fic, and this was consummated by the con
solidation. Yes, 1t was true that the Den
yer stock was worth SO, 100000 the next da
by the consummation Of the consolidation
After recess Judge j. +. Dillon wa
sworn. He said he thought he prepare,
the articles OF consolidation OF the roads
and that they were executed shortly after
He knew that Jay Gould, Sidney Dillon
and Mr.. Ames were stockholders In til
Union Pacific, and also In the Kansas Pa
cifc to some extent; didn't know O
their relations with the Denver Pacific
didn't know that the suit to release tn
7. Denver stock was brought to transfer til
! stock to Gould, Sage, Dillon, Ames, Dex
ter, and others.
= Sidney Dillon was next called and CAV
history of bis connection with the Unio
Pacific road. He was shown the pool cor
tract, but he never called 1t pool. Ill
testimony was mainly on the same line 0
that OF preceding witnesses.